California Mortgage Broker Bond

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Learn what surety bonds are, the different types of surety bonds, and how you can get bonded.Surety bonds are so confusing. I was told I had to post one but I have no idea what they are and which one is right for me. - Don't worry about it. I'll tell you everything about them. In general, surety bonds are not designed to protect your business, but rather to protect the public from dishonest business practices. A surety bond is a three-way agreement between you (the Principal), the Obligee (typically, a government department) and the Surety bond company which ensures that the bonded principal will comply with all the rules and regulations. There are four main types of surety bonds: license and permit bonds, contract bonds, court bonds and fidelity bonds. - I understand but aren't they all the same? Not exactly. Contract bonds are sometimes referred to as construction bonds. Contract bonds are designed to guarantee the performance of obligations under a contract. In other words, contract bonds protect the project owner (the obligee) by guaranteeing that the contractor will perform in accordance with the terms of the contract. There are several types of contract bonds, such as bid bonds, performance bonds and among others subdivision bonds. - Thanks, John! What about license bonds? What is the difference between license and contract bonds? License and permit bonds can be required either by the federal government, the state or the municipality. It is a prerequisite to receive a license or permit to engage in certain business activities. There are a number of license and permit bonds, such as auto dealer bonds, contractor license bonds, freight broker bonds, mortgage broker bonds and many more. For example, auto dealer bonds are required by States Department of Motor Vehicles and every state has their own bond requirements. - Thanks, John! Now I know what contract and license bonds are. What about court bonds? - Court bonds guarantee that the fiduciary will fulfill his or her responsibilities as ordered by the law or the court. There are a few types of court bonds, such as appeal bonds, guardian bonds and probate bonds. - I understand that surety bonds are designed to protect the public, but are there bonds that protect me as a business? - Yes. Fidelity bonds, also referred to as fidelity bond insurance, will protect you and your clients from any employee dishonesty, such as theft, embezzlement or forgery. You can think of fidelity bonds more as a traditional insurance policy than a typical surety bond. And these are the main types of bonds. I hope this explanation helped you figure out which one you need for your business. - Thanks, John! Now I know what surety bonds are and how they work.

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What Is a California Mortgage Broker Bond?

Mortgage brokers in California can get licensed via two different processes, depending on their business goals. The California mortgage broker bond is one of the main licensing requirements for one of the licensing options.

Regulating authorities require mortgage broker bonds in most states. The goal of these bonds is to protect your customers from potentially unlawful activities you may engage in. If a party suffers damages as a result of such actions, they can seek a reimbursement via a claim against your bond.

Your California surety bond is, in essence, a contractual agreement between three parties. The principal is your mortgage brokerage that needs to post the bond. The California Department of Business Oversight is the obligee to which you have to present the bond. Last but not least, the surety is the third entity that provides the bonding.

Frequently Asked Questions

Who needs to obtain a mortgage broker bond?

Mortgage brokers in California have two licensing options. You can license with the California Department of Business Oversight (DBO). In this case, your activities are regulated by California Finance Lenders Law (CFL) and you can partner only with lenders licensed under the CFL. As a part of getting this California mortgage broker license, you need to post a $25,000 broker bond.

Alternatively, you can also obtain a license with the California Bureau of Real Estate. Then you can work with all types of lenders. The licensing does not entail posting a bond.

How much does the bond cost?

California mortgage brokers who want to obtain a DBO license have to post a $25,000 bond. This is referred to as the bond amount, which is different from your bond premium. Your bond price is, in fact, only a few percents of this amount. If your finances are in good shape, the premium is likely to be between 1% and 5%.

Surety Bond Cost Based on Credit Score

Surety bond name

Surety bond amount

Above 700

Between 650-699

Between 600-649

Below 599

California mortgage broker bond

$25,000

$125-$312.5

$187.5-$375

$500-$$1,250

$1,250-$2,500

Your surety bond cost is determined on the basis of your personal credit score, business finances, and any assets and liquidity that you can showcase. After you apply with a surety, it will examine all these factors. In this way, it will assess the level of risk that bonding you poses. You can expect a lower bond cost if your finances and business stats are stable.

Can I get a bond with bad credit?

Lance Surety Bonds can get you bonded even if you are struggling with problematic finances. Our Bad Credit Surety Bonds program is suitable for mortgage brokers with low credit scores, tax liens, bankruptcies, or civil judgements.

The bond rates for bad credit applicants are typically between 5% to 10%. The higher price is due to the increased bonding risk. Still, w work with a number of A-rated, T-listed surety companies. This means we can shop around for the best bonding option for you.

How do I apply for my bond?

Are you interested in learning more about how bonding works? You can consult our How to Get Bonded page for thorough details.

You can always reach us at (877) 514-5146 for further questions. Lance Surety Bonds’ experts will assist you with your application or queries.

How are bond claims handled for mortgage brokers?

Surety bonds are there to guarantee your compliance with the law. In the case of California mortgage broker bonds, they ensure you will follow your obligations under the California Finance Lenders Law. If you fail to abide by it, you can get a claim on your bond. An affected party can seek a reimbursement of up to $25,000, the penal sum of your bond.

At first, it may be your surety that takes over the costs for proven claims, so that the claimant gets a quick compensation. However, you have to repay it fully afterwards. This means that bond claims are to be avoided as much as possible.

What Our Clients Have To Say?

Quick response times and turn around for issuing bonds. Great customer service and very knowledgeable. We have used Lance Surety multiple times and have never been disappointed. Highly recommend them and Collette!

Andrew Poincot

Long story short, these guys cut through the B.S. and get the job done. Responsiveness, excellent! Communication, excellent! Respect for their industry partners, excellent! John, Collette, Ryan, you're all-stars! Thank you!

Margie Martinez

We decided for Lance Surety Bond's quote for 2 reasons; Price and Customer Service. Our Representative Ryan was just SUPERB!! [...] I highly recommend Lance Surety Bond for all your Bonding needs! I'll definitely come back for all of mine. :-) Thanks Ryan!